“We are renewing Britain, but I know that too many people in too many parts of our country are yet to feel it.
But Mel Stride, the shadow Chancellor said that Reeves had set out a “spend now, tax later” review, and that she had “completely lost control”.
Rachel Reeves’ core message was that the “choices” she has made — including keeping a grip on day-to-day spending — have created fiscal space and market confidence to unleash an extra £113bn for capital spending.
Consequently, this spending review implicitly acknowledges the necessity of balancing fiscal responsibility with a more optimistic outlook to avert a repeat of the economic turmoil experienced under Liz Truss’s administration. Truss got a name check from Reeves. Unusually Reform UK Leader Nigel Farage also got two shout-outs, one for backing that mini-budget and another teasing him about internal party turmoil.
So too is ending asylum seekers staying in hotels which will save £1bn by the end of the Parliament – expected in 2029, Reeves announced.
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Reeves argues investment in infrastructure generates economic growth and the return on that means extra jobs and eventually people feeling better off. Nuclear power stations, rail schemes, roads and social housing all win. In the Commons chamber Housing Secretary Angela Rayner beamed.
The police scored more cash towards the aim of employing more officers, after a last-minute wrangle. Cops will have to find more efficiencies too.
A spending review with a “driving feature” to make working people feel better off could leave pensioners feeling left behind.
Hamish McRae: ‘A mixed bag’
Whether Britons will be better off after Rachel Reeves’s spending review will depend on one thing and one thing alone. Will it deliver faster economic growth?
And the answer to that will rely on whether the tax increases already announced, plus the possible further ones needed to sustain rising public spending, more than offset the positive impact of the measures she has just announced in the spending review. And much of that depends on what happens in the rest of the world, rather than what the Government does here in the UK.
Without growth we will end up poorer, not richer
There was a focus on affordable housing, which was welcome, but what matters most is the numbers. How fast can we add to the housing stock? Infrastructure, both in railways and electricity generation, has been neglected over the past decade, so there is a clear advance there too.
As for defence, an essential transformation has begun, though this will not show through in higher living standards – indeed rather the reverse, for money spent on the armed forces is money not available for spending elsewhere.
The UK currently pays the highest rate of interest in its debt of any G7 nation, and that is a concern. But there was nothing in the plans that would suggest it will have to pay more of a premium than it does now. There may, however, have to be higher taxes to fund the current spending element – and those taxes inevitably hit growth.
The pressure has clearly been on Reeves and the entire government. Today, I think Reeves expressed determination in difficult circumstances. The thing you have to remember about the spending review is that it is really only an itemised wish list of what the Government intends to spend in different departments.
I think the Chancellor, most likely under instruction from No 10, has shown more political sensitivity than was the case last year, when the Government inexplicably decided to withdraw the Winter Fuel Payment.
With the additional spending in defence, the NHS and housing, there is also extreme reluctance on the part of Labour backbenchers to reduce welfare spending.
Kwasi Kwarteng served as chancellor between September and October 2022 under Liz Truss
Rachel Reeves is delivering her Government’s spending review to MPs in the House of Commons (Photo: House of Commons/PA Wire)Ian Dunt: ‘This was old-fashioned Labour values’
The means-test threshold for winter fuel payments was primarily developed to stop the bleeding from Rachel Reeves’ politically catastrophic decision to change the system, but it is a good policy regardless of its motivation. It is set at a generous level of £35,000, meaning millions of pensioners will satisfy the requirements.
Tellingly, the spending was defined by old-fashioned Labour values. It felt, for the first time in a long time, as if Labour was trying to appeal to the people who might actually vote for it. Who knows? Maybe the idea will catch on.
Hugo Gye: ‘This is a wasted opportunity’
Rachel Reeves did not do a good job of explaining what she is doing differently as Chancellor.
This is a wasted opportunity. Reeves has done so much that is unpopular, she should be able to set out what those tough decisions are all for.
Some of her allies talk a good game. They say she is ramping up capital spending to seed long-term prosperity and restore tattered public services, without needing to spend more money in the long run.But she did not manage to set that out clearly in the House of Commons. Nor did she even hint at a solution to the ever-expanding NHS, which sucks up more and more taxpayers’ cash without delivering a notably better outcome than in the past.Perhaps over time the Chancellor’s tinkering will be vindicated – for example, forcing departments to bring their admin costs under control is probably a good idea – but today’s performance was not one for the ages.Hugo Gye is Political Editor
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